29th August (Issue 412)
Welcome to the Origin Capital Weekly Irish Property Review. This update is designed to provide you with a full recap of the latest property news from the media over the last seven days.
HOSPITALITY
Pub Sector Ireland has lost approx. a quarter of its pubs in the last 18 years as more and more publicans abandon the trade. Approx. 2,000 pubs have shut their doors since 2005, with the decline accelerating since the pandemic. Rural pubs were particularly hard hit and while the country as a whole lost 22.5% of its pubs over the period, Dublin fared best, with 3.4% of the capital’s pubs shutting down. The trends are revealed in a new study from the Drinks Industry Group of Ireland (DIGI), which describes the rate of closures as “alarming”. The industry is calling for a reduction in excise duty on alcohol in the upcoming budget to help boost trade. In total, 1,937 pubs shut down since 2005, an average of 114 a year, although the annual average rose to 152 since 2019. Currently, 6,680 pubs remain in business. The Irish Independent, 23rd August
Dalata Performance Hotel revenues across the Dalata group climbed 29% to €284.4m in the six months to June with room revenues well in advance of the same period last year. Profits before tax slipped 3% to €42m amid a 5% rise in central costs to €7.2m. Looking ahead, Dalata said it expects revenue per available room (Revpar) for July and August to be approx. 5% in advance of the same months last year. The average nightly price of a room across Dalata’s portfolio of hotels in Ireland and Britain jumped approx. 10% to €139.50 from €126.89 last year, with the group achieving like-for-like Revpar of €112.09, up 23% from 2022. Revenues across Dalata’s Dublin portfolio were 35%, or €38.8m, in advance of the first half of 2022 at €149.4m. The Irish Times, 29th August
RETAIL
Ulster Bank Branch Network Ulster Bank has instructed Cushman & Wakefield to dispose of the second tranche of properties from its former bank branch network. The sale of this phase comes just over two months on from the bank’s move to dispose of 18 of its premises as part of its ongoing withdrawal from the Irish market. While the first tranche was largely comprised of buildings in suburban Dublin and large provincial towns, the latest phase of 16 properties includes a number of landmark premises in Dublin city centre. The sale comprises 14 freehold/long-leasehold interests in high-profile pitches across the country. In Dublin these include: Baggot Street Lower; Camden Street; Walkinstown Cross; Tallaght, and Dún Laoghaire. Moving beyond the capital there are properties available in Naas and Newbridge in Co Kildare; Mullingar, Co Westmeath; Blessington, Co Wicklow; Longford; Monaghan; Limerick; Nenagh, Co Tipperary; and Sligo. The subject properties range in value from approx. €250k to more than €2m for the significant corner profile building on the corner of Baggot Street Lower. The Irish Times, 23rd August
Tesco Ireland is to spend €80m in its current financial year on eight new store openings and the upgrade of dozens of existing shops. The investment will be used to open eight new Tesco Express stores, carry out significant upgrade projects for 50 stores, and for maintenance across the store network. A Tesco Express will open at a new large apartment development, Two Oaks, in Rathfarnham, Dublin, next month, bringing Tesco’s estate to 167 shops in Ireland. Three more Express stores will open in Dublin by the end of the year, as well as other stores in Cork and Waterford. The Irish Independent, 27th August
Exchequer Street, Dublin 2 American Vintage, a French fashion brand, is to open its first standalone store in Dublin. The company has taken a lease of 32 and 34 Exchequer Street, close to the shopping strip of Grafton Street. A planning application to Dublin city council last week sought permission to add the American Vintage branding to the front of the store. The Sunday Times, 27th August
OFFICE
Office Market, Cork An analysis of the Cork office property market for the first half of the year revealed significant growth driven by the expansion of the HSE, according to Savills. New figures show a 19.4% increase in H1 2023 take-up compared to the same period in 2022, with a total of 196,400 sq. ft recorded. The expansion of the HSE played a major role, contributing to 56% of the deals in H1. One of the prominent transactions was at the Westfield Office Quarter, Ballincollig, where the HSE leased 64,000 sq. ft of space which had been vacant since its completion in Q4 2019. Headline rents in Cork remained stable at €32.50 per sq. ft. However, the vacancy rate for H1 2023 stood at 13.7%. The Business Post, 25th August
INDUSTRIAL / LOGISTICS
Grange Castle Business Park, Dublin 22 Data centre REIT CyrusOne has sought planning permission to construct a new data centre in Dublin’s Grange Castle Business Park. The planning application includes a request to demolish a single-storey house to make way for a two-storey data centre, delivery bays and a three-storey office block. Both buildings will have a gross floor area of 381,320 sq. ft. A decision from South Dublin County Council will be made this September. React News, 24th August
Park West Industrial Park, Dublin 12 Silent-Aire has completed two new lettings at Park West Industrial Park, Dublin 12 through CBRE. The company designs, engineers, manufactures and services modular data centres. The company has taken space at adjoining buildings, Unit SB1 and S2 at Park West Industrial Park on the Nangor Road. The units extend to 40,000 sq. ft and just over 67,500 sq. ft respectively. They have both been secured on new long-term leases. The company also occupies several additional buildings in Park West and was already one of the largest occupiers in the campus prior to the latest deals being agreed. The Business Post, 25th August
RESIDENTIAL / DEVELOPMENT
Housing Commencements Local authorities reported over 500 more homes commenced in July of this year than the same month in 2022, new figures from the Department of Housing show. In total, local authorities received commencement notices for 2,985 new homes in July 2023, an increase of 22.4% on the 2,438 new homes commenced in July 2022. The figure is also an increase on the 2,574 new homes commenced in June of this year. The Department of Housing says that 18,546 homes have been commenced in the first seven months of 2023, an increase of 11.8% on the same period last year. Approx. 11,010 of these are in the Greater Dublin Area. In 2022, 29,957 new homes were commenced in the State throughout the year. In 2021, the Government estimated in its Housing For All plan that 33,000 new homes would be required each year up to 2030. With five months remaining in 2023, 14,454 homes will need to be built to reach that target. The Irish Times, 24th August
Residential Market There is a “strong rationale” for treating the provision of mortgages as separate to other forms of lending, according to the head of the Institute of Professional Auctioneers and Valuers (Ipav) – an industry body representing auctioneers and real estate agents. Pat Davitt, Ipav chief executive, has said the government must give urgent consideration to products outside of those offered by pillar banks in order to make low interest mortgages widely available, as he called for sweeping measures to tackle housing affordability in October’s budget. According to Ipav’s most recent Residential Property Price Barometer, which examined the price of three- and four-bedroom houses and two-bedroom apartments in Ireland, selling prices for such units increased by 2.05% in the first half of this year. The Business Post, 28th August
South Docks, Cork Cork City Council has granted planning permission to O’Callaghan Properties for 1,325 homes on the former Gouldings site, off the South Docks. O’Callaghan Properties – through its subsidiary, Leeside Quays Limited – applied for planning in June for the residential units, comprising apartments and duplexes, on a 14.8-acre site at the former Gouldings fertiliser plant, with the city council granting planning permission in the last few days. The project will involve the construction of 658 one-bedroom units, 465 two-bedroom units and 202 three- bedroom units. The Irish Times, 28th August
Balbriggan, North Co Dublin Residents of Balbriggan have claimed that the North County Dublin region lacks the adequate resources needed to accommodate a new €251.5m residential scheme, which would see over 564 units added to the area. Over 90 objections have been lodged against the Large Scale Residential Development scheme with Fingal County Council. Dean Swift Property Holdings UC is seeking a 10-year planning permission to build 378 houses, 102 apartments and 84 duplex units on a site off Flemington Lane. A decision is due next month. The Business Post, 28th August
New Planning Bill A controversial Bill addressing systemic problems in the planning process and long delays in the completion times of developments will be enacted by Christmas, Minister for Housing Darragh O’Brien has said. The Planning and Development Bill runs to over 750 pages and is the third largest piece of legislation to be published in the history of the State. It includes a number of changes designed to accelerate building during the housing crisis, including fines for breaches of mandatory planning deadlines, and placing new limits related to the standing of parties to take court cases. The draft Bill extends the duration of a development plan from six years to 10 years, with a further two-year extension in exceptional circumstances. It will also provide for a new Coimisiún Pleanála to replace An Bord Pleanála. The Bill also provides that those bringing judicial review applications must have a “sufficient interest”. The Irish Times, 24th August
Mortgage Activity A record number of first-time buyer mortgages were approved in the year to the end of July, according to the latest data from the Banking and Payments Federation Ireland. Approx. 2,918 mortgages were approved for first-time buyers in the month, the industry body said. This brought the volume of first-time buyer mortgages to 29,754 for the year to the end of July, with a combined value of approx. €8.4bn. This represented a record annual high. Of the 4,747 mortgages approved in July, 1,148 (24.2%) were mover purchases. The number of mortgages approved fell by 0.4% MoM, with a 9.7% decline in approval rates when compared with July 2022. The value of mortgages approved for July was €1.36bn, of which €837m (61.7%) was for first-time buyer mortgages. This value of mortgage approvals saw no change MoM but fell by 6.7% YoY. Mover purchasers’ mortgages were valued at €391m (28.9%), bringing the total to €3.9bn for the 12 months to the end of July, the highest figure recorded since this data set began. The Irish Times, 25th August
Tax Breaks The Government will be offering tax incentives to small landlords to remain in the rental market, according to Minister for Finance Michael McGrath, who said the exact details of the plan have not yet been finalised. Mr. McGrath confirmed the details of a report which stated that Minister for Housing Darragh O’Brien was continuing to push for a tax break for small landlords as well as “a backstop” incentive for developers to keep building apartments. Under this backstop measure, the €450m Croí Conaithe scheme announced last year would be extended in an effort to boost the number of apartments for sale, with the State subsidising developers to the tune of €344k per unit. The State would buy apartments that developers cannot sell on the open market and then lease these on a cost rental basis in an attempt to help developers secure funding and increase the rental housing stock. The Irish Times, 28th August
OTHER
Construction price inflation for commercial developments has moderated significantly over the past year, new figures show. The latest tender price index from the Society of Chartered Surveyors Ireland (SCSI) found that the price surges being driven by spiking energy costs and supply chain issues are beginning to ease. The report found commercial construction tender prices rose by 2.4% in the six months to the end of June 2023. This was down from 3.7% in the second half of 2022. Inflation has fallen significantly over the past year. Between July 2021 and June 2022, commercial construction tender prices rose by 14%. This was the highest 12-monthly inflation recorded since the SCSI started the index 25 years ago. The rise in building inflation had been blamed for cost spikes on major developments such as the National Children’s Hospital in Dublin. The SCSI said the main issue facing commercial building firms is now finding enough skilled staff to man sites. The Irish Independent, 25th August
Construction Contract The contractor behind the National Children’s Hospital, which is at the centre of a dispute over costs, is in the mix to win a €140m public-private partnership contract from the government to design, build, finance and maintain buildings at universities. BAM is one of four shortlisted in June 2021 for the tender process for buildings at universities in Waterford, Limerick, Letterkenny, Galway and Carlow. The National Treasury Management Agency has yet to announce a winner. Enbarr Partnership, a joint venture between contractor JJ Rhatigan and Obrascón Huarte Laine and Macquarie, the Australian investor, was also shortlisted. The other companies shortlisted for Higher Education PPP Bundle 2 are John Sisk, the builder, which teamed up with Equitix; and Sacyr Kajima, a joint venture between Kajima, a Japanese real estate investor, and Sacyr Ireland, a Spanish firm. The Sunday Times, 27th August
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